Office of the City Treasurer
Under the direction of City Treasurer, the City's Pooled Investment Fund is managed by the Investments Division Staff. The authority to invest is delegated to the City Treasurer annually by the City Council.
The permitted investments are listed in the City Treasurer's Investment Policy, which is more restrictive than the California Government Code. The types of securities eligible for investment include U.S. Treasury securities, U.S. Agency securities, corporate medium-term notes, commercial paper, and repurchase agreements. A full list of permitted investments can also be found in the Investment Policy.
The first and foremost objective of the Pooled Investment Fund is safety of principal, followed closely by liquidity (the ability to convert an investment into cash quickly). Secondary to these two objectives is maximizing rate of return.
The Pooled Investment Fund is not open to public investment. Only money relating to the City's operating budget, capital improvement projects, taxable bond issues and other City monies are invested in the Fund.
The interest earnings and accrued interest distributions are applied on a monthly basis by the City Comptroller's Office.
The pro-rata share of investment income credited to fund participants is based on the interest allocation methodology administered by the City Comptroller's Office. This methodology is based on the following factors: the pooled investment fund's total monthly investment income, the monthly daily average cash balance/percentage for each fund participant, and the fund participants' beginning and ending accrual percentages.
The City's Pooled Investment Fund is comprised of monies from Governmental, Proprietary, and Fiduciary funds. Governmental funds include the General Fund, as well as other Non-major Governmental Fund types: Special Revenue, Debt Service, Capital Projects, and Permanent. Proprietary funds include Water, Sewer, various other enterprise funds, and internal service funds. Fiduciary funds include the Pension Trust Fund and various other Trust and Agency funds.
The City's Pooled Investment Fund is governed by California Government Code and the City Treasurer's Investment Policy, which is more restrictive than the Code. Both the Government Code and the Investment Policy spell out the eligible investments for the fund. Under the direction of the City Treasurer , the investment staff gauge the market environment, with the primary focus of safety of principal and liquidity, in determining what securities to purchase.
The City's Pooled Investment Fund is broken down into two portfolios. The Liquidity portfolio, which represents approximately 35% of the Fund, is a short-term portfolio designed to meet the City's immediate cash needs. The investments in this portfolio range between 1 day and 13 months until maturity. The Core portfolio is longer term in nature and represents approximately 65% of the Fund. Investments in the Core portfolio typically range from 1 year to 5 years until maturity.
The City invests in high quality securities, such as US Treasury securities, the debt of U.S. Agencies, medium term notes and commercial paper of highly-rated corporations, and other short term money-market instruments. The Fund is also very diversified, to mitigate the effects of issuer default. For instance, no more than 5% of the Fund may be invested in the debt of any one corporate issuer, and no more than 1/3 of the portfolio may be invested in the debt of any U.S. Agency. All investments must be rated "A" or better by a Nationally Recognized Statistical Rating Organization (i.e. Moody's, Standard and Poors, Fitch).